Rich getting richer, hard to get ahead, etc...

[Frances]

OK, you want to go into the land of silly - I'll play along.

 

Guess what? I wouldn't have to give up anything. All I would have to do is divorce my husband and BOOM - I am a single mother with 3 children and a PT job and all of a sudden I am eligible for EIC and Child tax credit, not even counting food stamps and housing assistance and all other good stuff. All while still living with my now ex-husband. And if you think that's horrible and dishonest - well, I guess you will be proposing policy changes that significantly crack down on this type of things bc it happens all.the.time. I've done more tax returns that I can count like that. And I've worked with many many women who were doing that.

 

But in the meantime - I am sure you are getting your check book as we speak to write checks to IRS for all the excess income that you are so willing to share, correct?

 

And do you also prepare corporate tax returns? Because if you really want to see who's gaming the tax system, both directly and indirectly, you need to look there first.

[MommyLiberty5013]

I would like to talk about pie. For one group there is a pie and its pieces inside it are finite. The pie is money or wealth and people are angry, frustrated, and maybe jealous that their piece of the pie is smaller than some one else's. So what some want to do is redivide the pie and everybody gets a sliver - the same exact sliver for everyone.

 

The issue is that wealth and money are not finite....there is not a limited number of dollars to go around (there is actually no pie), there are an unlimited number of dollars to go around. So, for the other side of this discussion, those people say, you do not have to redivide the money/wealth...just generate more - make more dollars (not literally mint them).

 

The U.S. is brilliant at generating more wealth (personally, and not to derail this discussion, I think we are not doing enough with alternative energies to make our nation a boat load of money and generate thousands of jobs, for example). Ironically, the programs we do have right now, are drum roll please, due to all the wealth generated in the past decades (the same wealth many here are angry at) that are being taxed then and now. Wealth generation is our friend. Dollars reinvested into companies pay for R&D, new jobs, bolstered ad and PR budgets, and the list goes on. Plus, those dollars are taxed to PAY FOR SOCIAL PROGRAMS!

 

If everyone gets the same sliver, we take away motivation - one of the key drivers of wealth generation. When wealth generation declines, our nation's programs will not get the funding at all, or enough that they need and MORE people than now will be SOL.

 

No one here is opposed to helping others, no one here is heartless. Some of us just do not see a pie at all. When people think we need to "level the playing field" what we hear is to take people's drive, gumption, and spirit of competition away.

 

I just had a brain storm...maybe all this bad blood between pie people and non-pie people stems back to eliminating the gold standard. Back then, there literally was a finite amount of money and wealth. Now, our wealth is actually fake. We use worthless paper and metals along with binary code to tell us how much something or someone is worth. But what if that all went away...............

Edited July 18, 2017 by MommyLiberty5013

[Frances]

Yes, it does. It is rampant in some areas. One of our employees talked about how this kind of "scamming" was happening a lot in his extended family. (Working class poor white folks.) They sold their SNAP cards to other people as well. Black market food stamps.

I think this goes back to an earlier post about the kind of poverty that can be helped with the money and the kind that is more entrenched due to culture and dysfunctionality. And those in the former group suffer when those in the latter group are the focus. But obviously I'm not saying abusing the system is ok or should be overlooked.

[Frances]

I would like to talk about pie. For one group there is a pie and its pieces inside it are finite. The pie is money or wealth and people are angry, frustrated, and maybe jealous that their piece of the pie is smaller than some one else's. So what some want to do is redivide the pie and everybody gets a sliver - the same exact sliver for everyone.

 

The issue is that wealth and money are not finite....there is not a limited number of dollars to go around (there is actually no pie), there are an unlimited number of dollars to go around. So, for the other side of this discussion, those people say, you do not have to redivide the money/wealth...just generate more - make more dollars (not literally mint them).

 

The U.S. is brilliant at generating more wealth (personally, and not to derail this discussion, I think we are not doing enough with alternative energies to make our nation a boat load of money and generate thousands of jobs, for example). Ironically, the programs we do have right now, are drum roll please, due to all the wealth generated in the past decades (the same wealth many here are angry at) that are being taxed then and now. Wealth generation is our friend. Dollars reinvested into companies pay for R&D, new jobs, bolstered ad and PR budgets, and the list goes on. Plus, those dollars are taxed to PAY FOR SOCIAL PROGRAMS!

 

If everyone gets the same sliver, we take away motivation - one of the key drivers of wealth generation. When wealth generation declines, our nation's programs will not get the funding at all, or enough that they need and MORE people than now will be SOL.

 

No one here is opposed to helping others, no one here is heartless. Some of us just do not see a pie at all. When people think we need to "level the playing field" what we hear is to take people's drive, gumption, and spirit of competition away.

 

I just had a brain storm...maybe all this bad blood between pie people and non-pie people stems back to eliminating the gold standard. Back then, there literally was a finite amount of money and wealth. Now, our wealth is actually fake. We use worthless paper and metals along with binary code to tell us how much something or someone is worth. But what if that all went away...............

I don't think most are advocating for the same sliver or something akin to socialism. The chances of that ever happening in the US are pretty darn slim. But I think there is a pretty wide gap between that and what we have now and generally, people are advocating for something in between with some sort of universal healthcare and more equitable education topping my list. And especially when you focus on wealth, not income, there is no disputing the fact that in the US the pie slices are getting more and more unequal.

[MommyLiberty5013]

I don't want an equal slice of my national pie. I don't want holidays, or glitzy homes, or private schools or investment portfolios.

 

I want POLICY SETTINGS that mean by WORKING I can access the basics of life - shelter, food, education, medical care. That's it. I want to not worry every single freaking day about what happens when I can no longer work and am HOMELESS because I can't afford artificially jacked up rents.

 

Where I live, every single person I know who has managed to buy a (basic) home on the median wage in the last decade - so essential workers like teachers or nurses - has done so because they've been able to access equity through family. An inheritance from grandparents, a lump sum from parents. 

 

In what world is it fair that those of us who can't accesss inherited wealth and who earn the median wage can be hard working but still shut out from something as basic as a permanent roof over one's head?

 

I tell you what drains drive and gumption? Worrying about turning 70 and being out on the streets. 

Well, I agree with you.

 

So the issue is specifically inherited wealth? Or is it raising rents? Or is it not being able to buy a basic home? Or all of the above?

 

I have trouble understanding this one thing though, there is math out there that informs renters when it makes more sense to buy a home versus stay renting. For example, if one is paying $1,500 a month in rent, sometimes it makes more sense to put that into a "permanent roof." And, there are loans available to first time home buyers with little to nothing down. The government has made that sort of loan a reality for many people in the U.S. through the VA, USDA, and/or FHA. So there are options and programs for people to do the math and buy a permanent roof, which fulfills that basic need, provides security for longevity, and helps someone build equity (eh hem...wealth).

 

Also, a lot of people alter their locations to make home ownership and that security a reality. There is the choice. What are a person's priorities - not saying you specifically, just a person in general?

 

It seems like you want to have a long-term home, which I think makes sense. But you want to have all the terms for that scenario on your terms. You have a valid point that everyone in America should have housing security in their golden years (my dad's term), but you want everyone else to change (not have inheritance, not build wealth, not pass anything along) to get everyone there is what it reads like here.

 

Is that an accurate assessment? If not, please explain.

[Reefgazer]

Once you have a basic social safety net in place (which isn't intended to make sure *all* expenses are met, but to supplement), then this is the remaining issue.

They aren't the norm because of generational and cultural factors common in impoverished communities. I can't tell you how many friends we lost because we kept struggling to get out. Every success cost me someone, and that's a high price to pay. Not everyone is willing to do it. My husband and I did because I had medical issues that had gone mostly untreated for years, and at the time our goal was a job that offered insurance. We made it to the low 6 figures. We're hoping to give our kids a better start than we had. This is how it is SUPPOSED to work.

How on Earth do you think you're entitled to the proceeds of generations of work on the part of other families? I don't mind funding a safety net for basic needs, and I'm active with local charities through my parish, but the idea that somehow our success means the government redistributing a large portion of our salary to people who are unwilling to take the chances and do the things we did makes my blood boil. The entitlement mentality is what holds people back, not other people's success.

 

[MommyLiberty5013]

I don't think most are advocating for the same sliver or something akin to socialism. The chances of that ever happening in the US are pretty darn slim. But I think there is a pretty wide gap between that and what we have now and generally, people are advocating for something in between with some sort of universal healthcare and more equitable education topping my list. And especially when you focus on wealth, not income, there is no disputing the fact that in the US the pie slices are getting more and more unequal.

 

But there is not a pie, some people see all this as a pie. If someone sees someone else having more, they think they have less and the only way to get more for themselves is to take from someone else's deemed "excess." But, many do not think the finite pie exists at all, that was my previous point.

 

Many see wealth, money, and income as infinite. And someone having more is not a threat to me, meaning that I will always have less. Someone's else's fortune \ne (is not equal) to me having nothing or little. So if I am a person who has nothing or little, I do not think the best solution lies in me taking from someone else's "excess."

[hepatica]

Well, I agree with you.

 

So the issue is specifically inherited wealth? Or is it raising rents? Or is it not being able to buy a basic home? Or all of the above?

 

I have trouble understanding this one thing though, there is math out there that informs renters when it makes more sense to buy a home versus stay renting. For example, if one is paying $1,500 a month in rent, sometimes it makes more sense to put that into a "permanent roof." And, there are loans available to first time home buyers with little to nothing down. The government has made that sort of loan a reality for many people in the U.S. through the VA, USDA, and/or FHA. So there are options and programs for people to do the math and buy a permanent roof, which fulfills that basic need, provides security for longevity, and helps someone build equity (eh hem...wealth).

 

Also, a lot of people alter their locations to make home ownership and that security a reality. There is the choice. What are a person's priorities - not saying you specifically, just a person in general?

 

It seems like you want to have a long-term home, which I think makes sense. But you want to have all the terms for that scenario on your terms. You have a valid point that everyone in America should have housing security in their golden years (my dad's term), but you want everyone else to change (not have inheritance, not build wealth, not pass anything along) to get everyone there is what it reads like here.

 

Is that an accurate assessment? If not, please explain.

 

This is a massive oversimplification of the factors that go into home ownership. Try reading this

[hepatica]

This is getting silly. If there is nothing but infinite pie, then why are folks so protective of their "piece?" Pass that pie because there's always more where that came from...

[MommyLiberty5013]

Inherited wealth should not be the only way a person on a median income can access housing security. 

 

The government should not be in the business of distorting the housing market through concessions and benefits to owners and investors, such that a basic need like housing is out of reach of the ordinary worker. 

 

Where I live, the rich are indeed getting a huge helping hand, with pernicious effects on the ordinary worker. 

 

I am housing insecure, not because I am stupid or because I am lazy, but because of deliberate policy decisions made to favor the wealthy. As Moxie said at the beginning of this thread, that is dispiriting. 

I think that would be dispiriting. It would be like treading water.

 

I certainly do not thnk you are stupid or lazy. So it is about inheirated wealth.

 

The loans I addressed (VA, USDA, FHA) are still available despite the distorted housing market, correct? So, a median income worker in your area could feasibly get one of these loans, because the existence of government meddling in housing prices in your area does not negate the existence of the buying power, via these loans, to the median income worker. But, if the government meddling has inflated the housing cost SO much that a VA, USDA, or FHA loan would never be written on these properties due to their too high price tag, then those loans are out of one's reach. That would be so frustrating.

 

I still do not see how inherited wealth of those teachers and nurses you mentioned has anything to do with government/meddling/inflation of housing prices.

[hepatica]

government meddling has inflated the housing cost SO much 

 

So you would support getting rid of the mortgage interest deduction which has greatly inflated housing prices? At least we can agree on that.

[Frances]

But there is not a pie, some people see all this as a pie. If someone sees someone else having more, they think they have less and the only way to get more for themselves is to take from someone else's deemed "excess." But, many do not think the finite pie exists at all, that was my previous point.

 

Many see wealth, money, and income as infinite. And someone having more is not a threat to me, meaning that I will always have less. Someone's else's fortune \ne (is not equal) to me having nothing or little. So if I am a person who has nothing or little, I do not think the best solution lies in me taking from someone else's "excess."

But let's taking housing where I live. Two of the cities in my state have seen astronomical increases in housing prices since the recession. So those who bought at the bottom, even just barely middle income people, now have a great deal of equity or wealth in their house. But someone just moving to the area and making the same income would find it impossible to now afford a home unless they lived so far away that they would have to add substantial commuting costs, both financial and personal. And now because there is a shortage of construction workers due to all those who left the field during the recession, new housing, whether rental or purchasing, costs more for everyone. Those that got in at the bottom not only increased their wealth, but even on a fairly modest income now have a secure place to live. While many in the area will now never be able to buy or even afford a decent place to rent, despite the rising wages, income, and wealth in the area.

 

And I guess you could say, well just move somewhere else. But we still need people to do the jobs that only pay lower or lower middle class wages, and they still need some place safe and affordable to live.

Edited July 19, 2017 by Frances

[MommyLiberty5013]

So you would support getting rid of the mortgage interest deduction which has greatly inflated housing prices? At least we can agree on that.

Yes. I would get rid of most deductions and simplify the tax code - to like three pages.

Edited July 19, 2017 by MommyLiberty5013

[Scarlett]

I'm glad I'm not the only one appalled by the sheer selfishness in this thread. MY money. Like all wealth doesn't come from the same, finite shared planet.

Yes, sickening. Terms like 'someone else's money' just boil my blood. As if a person who qualifies for aid has robbed a neighbor.

[Frances]

Yes, sickening. Terms like 'someone else's money' just boil my blood. As if a person who qualifies for aid has robbed a neighbor.

I think some small government advocates do truly see it that way. Everything they pay in taxes has been taken from them by the government. And they would prefer all aid to be given voluntarily without the government involved. Not my view, but it seems quite common in the US. In general, I think the US has a much more individualistic view than many European countries who have a more collective "we're all in this together" view, especially when it comes to education, healthcare, and support for the elderly and young.

 

That's why many earlier in the thread were advocating for both working for change at the national level and making choices for your family to optimize things in the current reality. Maybe I'm a pessimist, but I think things are going to get a lot worse in the US before they get better.

[Reefgazer]

Because I did make it without government help; my student loan was private and was paid back with interest, we have no HSAs, no college savings account because we didn't want the restrictions on them, and my DH's government healthcare is part of his compensation package for the work he does).  The mortgage interest deduction is not government welfare; it is simply returning my money to me that the government has confiscated.  In addition, that mortgage deduction, which helps all people buy homes, promotes employment in appliance purchases, Home Depot-like stores, and lawn care services.  Clearly, even Congress is able to see that it is a deduction that pays back in created jobs because it is one of the few deductions preserved in the 1986 tax reform bill.  The IRA is my own money, including the part that is confiscated for taxes that the government so graciously gives me a "break" on.  We all pay taxes to fund Medicaid, but it is still straight-out welfare and not comparable to the other items on your list.  This is because the taxes taken will never be used by the wealthy who pay them and instead given to others, who will reap far more than they paid in (if they even paid in anything).  I do agree with you that all social security benefits should be taxed.

 

According to the IRS and Pew Research, the majority of taxes are paid by the wealthy, and in 2014, 35% of citizens paid nothing in income taxes.  I'm having trouble linking, but these are the second and third sources that come up on a Google search, plain as day.  This country uses the wealthy as its cash cow, and without the income taxes paid by them, there would be zero safety net.  People who clamor to confiscate "more" from the wealthy certainly know this, as well.  I do think we need to strengthen our social safety net and states need to solve the health care issue.  But everyone needs to contribute something and have some financial skin in the safety net game.  Right now, there are too many people who think that they are entitled to other people's money without considering what they can do to relieve the pressure on the system.

Why is it those who have made it think they did it all on their own with no government help? Sixty percent of the people who claim the mortgage interest deduction say they have never, ever used any government program. The mortgage interest deduction is a $71 billion dollar tax expenditure every single year. But if some poor person takes a subsidy for section 8 housing they are "takers." You get tax breaks for investments, for IRAs and health savings accounts, for college savings accounts. Only a small portion of the income of wealthy Americans is taxed for social security, yet all of the income of less affluent Americans is taxed. The wealthy benefit so much more from government handouts than the poor. I don't see anyone here (except creekland) offering to give up all those benefits.

 

Edited July 19, 2017 by reefgazer

[SKL]

OK, bc I am obviously gluten for punishment....

 

To whoever compared mortgage deduction with Sect 8 housing assistance.  Let's throw some numbers into this:

 

Let's say I am that wealthy SOB who is making $100K/yr and I buy a fancy $200K house.  Let's say (since I can't count very high I'll make numbers very simple) my mortgage payment is $1000/mo.  Le's say my  interest is probably $500/mo or $6K /yr.

 

Tax return time comes and I am jumping for joy bc I can deduct that $6K.  But wait!  It's not a credit, it's just a deduction, which all it means that my taxable income will simply be decreased by $6K.  Yay me, right?  Well....but I PAID that $6K, no one gave it to me.  But wait, there is more!  I don't get the whole $6K benefit, I only get a % of it, depending on what my tax rate is. 

 

So, I paid taxes on  my earnings.  I am paying interest on my loan.  And at the end of the day I am getting a benefit of returning MY $2K that I paid with my AFTER TAX money.

 

The way Sect 8 works:   Govt provides me with someone else's money to live in a house. 

 

I am not even getting into logistics of standard vs itemized deduction bc if I don't have enough to itemize, that mortgage deduction doesn't even matter to me. 

 

OK, I really need to get off this thread and get a life. 

 

And the mortgage interest deduction, like all itemized deductions, phases out at a certain income level.  Not a particularly high level.  So no, people with high taxable income are NOT deducting their mortgage interest, nor their state/local income or property taxes.

 

 

[MommyLiberty5013]

I think some small government advocates do truly see it that way. Everything they pay in taxes has been taken from them by the government. And they would prefer all aid to be given voluntarily without the government involved. Not my view, but it seems quite common in the US. In general, I think the US has a much more individualistic view than many European countries who have a more collective "we're all in this together" view, especially when it comes to education, healthcare, and support for the elderly and young.

 

That's why many earlier in the thread were advocating for both working for change at the national level and making choices for your family to optimize things in the current reality. Maybe I'm a pessimist, but I think things are going to get a lot worse in the US before they get better.

I think that needs to be clarified to "small Federal government" advocates. I am a firm believer in letting the locales and states deal with their own programs and needs, and letting the Federal government deal with things like the military, Interstates, National Parks, and Federal taxes, just to name a few.

 

In the past few years, Post cereals bought out Malt-o-Meal, which was headquartered in my pervious suburb of Minneapolis. Post is HQ'd on the East Coast, I believe. So they were trying to manage Malt-o-Meal from a distance for a bit and according to a mid-level MOM manager friend, who has since moved out of state, said it was really rough to have people on the one side of the nation trying to deal with there location of offices and the plant here in MN.

 

It is like that with Federal versus State involvement. Let each state determine its needs for its citizens on its own. AZ will be different than IA will be different than FL and on and on.

 

Not once have I advocated for not helping those who need it. In fact, if you read up thread, you can see my whole discussion about some of what DH and I do to help out.

 

What happens always is that one side says my side is heartless, selfish and cold, but really we want to help too, we just want to do it differently - move it to the states and stop viewing other's "excess" as the cause of others having less.

 

 You said European nations have more of a collective attitude. Well, yes. They are also much smaller in terms of population and geographic size than the U.S.. Each state here is like a whole European nation unto itself in terms of size and culture - let them operate that way. Let Texans take care of Texans and Ohioans take care of Ohioans. But, you are advocating for an office in D.C. to oversee something across 50 states that are as varied and unique as well, we posters all are here. Why? It makes no sense.

[mamajag]

Please forgive the minor rabbit trail, but this touches on something I've been thinking about.  Why is risk-taking seen as so critical to success these days?  It seems so un-American to rely on taking risks to get ahead.  Fundamentally, taking a risk means relying on luck, and the United States still has at our core the Puritan ideas of hard work, delayed gratification, and investment (perhaps in oneself) as key to success.  Randomness as a key factor to success seems foreign and wrong to me.  Obviously, there are no sure things, but it strikes me that the most American approach to that is to reduce risk by hard work, education, research, etc., not just by rolling the dice and taking a risk.

 

I feel like we've completely lost the meaning of the work "risk".  We use it colloquially as Moxie did above when talking about starting a business, but how much the the daughter really risk?  Was she ever in danger of becoming homeless and not knowing where her next meal might come from if her business failed?  I doubt it.

 

If my husband and I hadn't taken a risk, we'd still be living in a run down trailer in MS...if that. I left college to join my husband on a traveling construction job. The pay wasn't great, but it was better than either of us (or my mom) had ever been paid. When that started to falter my husband got a job sand blasting and painting in the offshore oil fields. At that time oil was climbing, and his company offered courses on maintenance and operations for free during his time home. The downside was that we had to pay for hotels and would only get per diem. We sunk every bit of money we could spare into those courses. After 12 years in the industry, he's a mentor in Africa teaching nationals how to run a platform themselves all because we spent all his downtime in hotels living off a measly per diem. It was miserable. We hated it. We did it for long-term payoff. The guys that onboarded with him and didn't take those courses are either out of a job or sitting in the gulf making less than half what my husband is. 

 

There's risk in every type of change: starting a business, pursuing a degree, grabbing a second job. It could backfire. It could fail. You might not get a job in your field and be left with student loans. It's risky. It's also just about the only way to significantly change your economic status. It's considered safe to be stable and do what you've always done, even if what you've always done is barely get by.

[Rosie_0801]

That said, I am not sure we are structuring student aid the best way, since it seems to just increase costs overall somehow.  Just like health insurance policy seems to.  We need better thinkers to help the target groups without messing up everything else.

 

In Oz, student loans are a government scheme and there is a minimum threshold before you're required to pay it back.

 

We don't have a culture of scholarships though, so without this loan scheme, university would be for rich people only.

[SKL]

re mysteries of the mortgage interest deduction

 

 

That's it, isn't it.  Why indeed.

 

And the take-a-step-back bigger picture question: is choosing to favor homeowners over housing renters an appropriate role for government to take on in the first place.

 

I think this goes back to the theory that if you own your own, you have more power vs. if someone else owns and can kick you out or make it so hard that you move out.  There is also a theory that if you own your home, you will be more responsible to your neighborhood / community since you have a long-term commitment to it.  I'm sure there are other reasons too why we have a policy to encourage home ownership.

 

I have never been impressed with the hodgepodge approach to tax incentives for higher education.  We need to go back to the drawing board on that for sure.

[Frances]

I think that needs to be clarified to "small Federal government" advocates. I am a firm believer in letting the locales and states deal with their own programs and needs, and letting the Federal government deal with things like the military, Interstates, National Parks, and Federal taxes, just to name a few.

 

In the past few years, Post cereals bought out Malt-o-Meal, which was headquartered in my pervious suburb of Minneapolis. Post is HQ'd on the East Coast, I believe. So they were trying to manage Malt-o-Meal from a distance for a bit and according to a mid-level MOM manager friend, who has since moved out of state, said it was really rough to have people on the one side of the nation trying to deal with there location of offices and the plant here in MN.

 

It is like that with Federal versus State involvement. Let each state determine its needs for its citizens on its own. AZ will be different than IA will be different than FL and on and on.

 

Not once have I advocated for not helping those who need it. In fact, if you read up thread, you can see my whole discussion about some of what DH and I do to help out.

 

What happens always is that one side says my side is heartless, selfish and cold, but really we want to help too, we just want to do it differently - move it to the states and stop viewing other's "excess" as the cause of others having less.

 

You said European nations have more of a collective attitude. Well, yes. They are also much smaller in terms of population and geographic size than the U.S.. Each state here is like a whole European nation unto itself in terms of size and culture - let them operate that way. Let Texans take care of Texans and Ohioans take care of Ohioans. But, you are advocating for an office in D.C. to oversee something across 50 states that are as varied and unique as well, we posters all are here. Why? It makes no sense.

Efficiency and large scale purchasing power are two reasons off the top of my head. One reason healthcare costs are so much lower in other countries is that have used the collective bargaining power of all of their citizens to make deals with drug companies, medical supply companies, etc. We in the US are actually subsidizing some of the lower costs in these countries.

 

And while there are certainly differences across the country, I think there are more similarities. Just like I don't think it made any sense for all 50 states to spend the time and $$$$$$ developing 50 sets of standards and state tests, some things such as the earned income tax credit are most efficiently done at the federal level. I honestly think it would be frightening to see how far down some states would go if left completely to their own devices. And some people, including members of our military, have almost no control over where they live.

[Frances]

I think this goes back to the theory that if you own your own, you have more power vs. if someone else owns and can kick you out or make it so hard that you move out. There is also a theory that if you own your home, you will be more responsible to your neighborhood / community since you have a long-term commitment to it. I'm sure there are other reasons too why we have a policy to encourage home ownership.

 

I have never been impressed with the hodgepodge approach to tax incentives for higher education. We need to go back to the drawing board on that for sure.

While there may be lots of valid reasons to promote home ownership, research has not shown the mortgage interest deduction to be a significant factor in rates of home ownership.

[MommyLiberty5013]

But let's taking housing where I live. Two of the cities in my state have seen astronomical increases in housing prices since the recession. So those who bought at the bottom, even just barely middle income people, now have a great deal of equity or wealth in their house. But someone just moving to the area and making the same income would find it impossible to now afford a home unless they lived so far away that they would have to add substantial commuting costs, both financial and personal. And now because there is a shortage of construction workers due to all those who left the field during the recession, new housing, whether rental or purchasing, costs more for everyone. Those that got in at the bottom not only increased their wealth, but even on a fairly modest income now have a secure place to live. While many in the area will now never be able to buy or even afford a decent place to rent, despite the rising wages, income, and wealth in the area.

 

And I guess you could say, well just move somewhere else. But we still need people to do the jobs that only pay lower or lower middle class wages, and they still need some place safe and affordable to live.

I hear you. All of what you're saying makes total sense.

 

I just do not think an across the board sweeping tax plan to level the playing field makes sense. States need to tackle this on their own as I just wrote about in another post here. Your two cities experiencing this trend, do not need to be micromanaged by a D.C. bureaucrat, this is an issue relevant to this particular state, WV faces issues with drug overdoses, addictions, and joblessness. FL has issues with a large aging population. Every state has their"thing."

 

A hugely viable option is to allow the states to handle their own programs to tailor them to their own citizens. If my Federal tax decreased, because programs got phased off to the states, but my state tax increased to pay for MY state's needs, I would be fine with that. I dislike the nebulous nature of Federal government taking a one size fits all approach to things and that echoes thorugh convos like this one as "tax 'em more!!!"

 

We have 13 townships or cities in my county. A few years ago, the county decided to push a lot of decision making it had done off into the hands of the smaller locales. Brilliant! Now, my rural township does what it needs to make our 280 households function best and the city we moved from with massive infrastructure and 86,000 people does what it needs. The county was smart enough to see how each locale does best to handle its own area-specific affairs.

Edited July 19, 2017 by MommyLiberty5013

[Pam in CT]

This is the issue I deal with here. Policy favouring owners and investors have screwed with the market so much that house prices are insane. Despite having two people working at way more than minimum wage, we are locked out of the market.

 

Affordable housing is almost non existent. Social housing has decades long waiting lists. Renters have few rights.

 

If, when I am old and sick and can no longer work, I become homeless, due to no longer being able to compete in the private rental market, that will be down to two factors. Lack of family wealth to game the system, and the system design itself.

 

But owners and investors feel just fine about their government benefits, while begrudging us the miniscule amount of rent assistance we receive.

Sadie, how do public policies favoring home ownership work in Australia?  Your national tax revenues are a combination of income tax and VAT?  What's the approximate breakdown?  Do you have a something like our MID against your income tax?  And what else adds up at the province/local level?

 

 

I don't know about US loans.

 

First home buyer loans here just drive up prices.

 

You can't get a loan for a deposit. Deposits here run $100 000.

 

Impossible to save on median wage while paying rent, utilities, transport, food.

 

This isn't just life. Its deliberate policy settings by government, in the service of a neoliberal ideology that priortises the desires of the wealthy over the needs of the poor.

 

Down payments here are typically 10% of the house purchase price, sometimes as low as 5% (particularly during our last real estate bubble; that's less true now); certain types of cooperative apartment buildings require 20% as a means of pre-qualifying buyers' financial means.  Theoretically you can't borrow the down payment from a bank here either, though some people look to parents to help out there.

 

There is no question that the MID props up real estate prices (see analysis in my links above).  That's one of the main barriers to its ever being dismantled -- existing owners, and particularly real estate builders and real estate agents, constitute a powerful lobbying interest against its ever being re-evaluated.

[SKL]

This is the issue I deal with here. Policy favouring owners and investors have screwed with the market so much that house prices are insane. Despite having two people working at way more than minimum wage, we are locked out of the market.

 

Affordable housing is almost non existent. Social housing has decades long waiting lists. Renters have few rights.

 

If, when I am old and sick and can no longer work, I become homeless, due to no longer being able to compete in the private rental market, that will be down to two factors. Lack of family wealth to game the system, and the system design itself.

 

But owners and investors feel just fine about their government benefits, while begrudging us the miniscule amount of rent assistance we receive.

 

Where I live, well over 90% of residents are homeowners.  And I do not live in a rich area at all.  It is also pretty easy to buy a house in poor neighborhoods.  I've seen them under $10,000.  So where I live, they are serious about encouraging homeownership for the majority of people, not just wealthy people.  We also have serious charities that help make homeownership feasible.  Also the inheritance rules allow for transfers of modest property to be done without tax.

[Reefgazer]

But this is what I have seen in my own family and neighbors in the 3 communities where I have lived, so it clearly is common enough so that it's a factor in poverty.  For example, I know someone who cannot get a job that will lift her out of poverty because she doesn't drive and the lessons are expensive.  So I paid for driving lessons and offered my car as a practice vehicle.  Nope - she took the lessons and doesn't want to practice because "driving is stressful".  Suck it up if you want to improve yourself hun; there are lots of things that are stressful, but start adulting and take responsibility.  Do you think I'll help her again when she's in a financial rut, when the $700 I already spent has essentially been wasted?  Example #2:  I anonymously offered to pay for a 2-year degree for someone, which, as it turned out, didn't amount to much because, after aid, all tuition and fees were covered by state and federal government programs (which seems to lay waste to the idea that you can't attend college if you are poor, but that's another topic).  So I offered up the things needed to supplement an education:  bus pass, laptop, new clothing, etc...  The person dropped out after one semester.  She's back in school two years later now, and hopefully the credits she earned that one semester can apply to her new degree.  I'm rooting for her, but that's all I'm doing because I am not risking another drop-out scene and loss of my money.  Next up:  Example #3 (a troubled young relative who was on the wrong track, dropped out of high school, has no job prospects, and was getting in minor legal trouble).  I offered to have this kid live with me in the hopes that a new environment and better job prospects where I live would help him pull himself out of his rut.  I offered to help him earn his GED, pay for community college, and fully support him for a few years until he reached his goal.  The rules were simple:  No smoking indoors, you have to be full time employed/full time in school/part time school-work combination, and random drug testing (because DH's top-secret security clearance and subsequent livelihood depends on him inhabiting a drug-free environment).  Nope - kid didn't want to be restricted by the no-pot rule.  He's now 29 and has zero prospects solely because of his own poor choices. 
 
I have more examples of similar circumstances; several of them.  How many examples do you need before you can acknowledge that a person's choices matter?  That people can rise above their circumstances if they seize the help and opportunities presented to them?  Luck?  Baloney.  People make their own luck by setting themselves up for success and taking advantage of what's right in front of them.  I do not for one minute think these 3 people are the rare exception, although I also have seen people who make wise use of the resources and wise choices.  I am unwilling to voluntarily throw my money away on people who make no effort to do anything but survive at subsistence level and then complain that they are unsupported; it's just throwing good money after bad.  I can't do much when government confiscates my cash to do the same, but I firmly believe that all the money tossed at people who don't take advantage of it will not do one blessed thing to change their problems.  In fact, I think close-up personal mentoring is the only thing that has a chance of working to alleviate poverty, but as a previous poster mentioned earlier and as my prior experiences demonstrate, that's not a sure thing, either.  
 
 
 
 
And here it is again, the idea that people are unwilling to do what it takes to succeed, and that is why they are poor.  That is not true for MOST of the poor, which is the whole point of this thread.  But it keeps showing up over and over again...
 
Does someone not deserve assistance because their grandparents and parents weren't smart enough?  No.  Not any more than we individually "deserve" or have "earned" being well off if our grandparents and parents were smart enough.

Edited July 19, 2017 by reefgazer

[Reefgazer]

Duplicate post.

Edited July 19, 2017 by reefgazer

[creekland]

I would like to talk about pie. For one group there is a pie and its pieces inside it are finite. The pie is money or wealth and people are angry, frustrated, and maybe jealous that their piece of the pie is smaller than some one else's. So what some want to do is redivide the pie and everybody gets a sliver - the same exact sliver for everyone.

 

The issue is that wealth and money are not finite....there is not a limited number of dollars to go around (there is actually no pie), there are an unlimited number of dollars to go around. So, for the other side of this discussion, those people say, you do not have to redivide the money/wealth...just generate more - make more dollars (not literally mint them).

 

The U.S. is brilliant at generating more wealth (personally, and not to derail this discussion, I think we are not doing enough with alternative energies to make our nation a boat load of money and generate thousands of jobs, for example). Ironically, the programs we do have right now, are drum roll please, due to all the wealth generated in the past decades (the same wealth many here are angry at) that are being taxed then and now. Wealth generation is our friend. Dollars reinvested into companies pay for R&D, new jobs, bolstered ad and PR budgets, and the list goes on. Plus, those dollars are taxed to PAY FOR SOCIAL PROGRAMS!

 

If everyone gets the same sliver, we take away motivation - one of the key drivers of wealth generation. When wealth generation declines, our nation's programs will not get the funding at all, or enough that they need and MORE people than now will be SOL.

 

No one here is opposed to helping others, no one here is heartless. Some of us just do not see a pie at all. When people think we need to "level the playing field" what we hear is to take people's drive, gumption, and spirit of competition away.

 

I just had a brain storm...maybe all this bad blood between pie people and non-pie people stems back to eliminating the gold standard. Back then, there literally was a finite amount of money and wealth. Now, our wealth is actually fake. We use worthless paper and metals along with binary code to tell us how much something or someone is worth. But what if that all went away...............

 

Absolutely no one on here has said they want the same sliver of pie except those complaining about how the poor get far more benefits than they do - yet they seem terribly unwilling to trade places with them for some reason or another.

 

With the second part of what I've underlined... have you looked at the national debt lately?  'Cause I don't see much "wealth" in our country compared to the older days - post safety net, but with higher tax rates.  I see our country owing an awful lot of money with most of it added in the past decade or two - and more promised in the next few years - far more than I would allow my family to owe proportionately.

 

I just googled how much we all owe (per capita) as of 2015.  It's about $56,375 - each.  In 1990 it was $12,800 each.  Do you want to tell me again just how much wealth we are generating with our policies and lower taxes in this country - because I don't see it.  I see a disaster looming before long.

 

https://www.statista.com/statistics/203064/national-debt-of-the-united-states-per-capita/

 

That said, I want a safety net (paid for from a collective pot - which means increasing taxes, though for health care, for many it would also mean an increase in salary because their job doesn't have to pay or a decrease in costs they are already paying).  I don't want investors profiting from health insurance.  I don't want high paid CEOs, etc.  I want to help care for my brothers and sisters - not the same sliver of pie (existent or not) - but I just don't have a hair on my body that tells me "Cool, I've got mine - sucks to be them."  I know some folks cheat the system.  Such is life - with the wealthy and the poor.  I don't feel it's worth tossing out systems that help so many because of the actions of a relative handful.

[MommyLiberty5013]

Efficiency and large scale purchasing power are two reasons off the top of my head. One reason healthcare costs are so much lower in other countries is that have used the collective bargaining power of all of their citizens to make deals with drug companies, medical supply companies, etc. We in the US are actually subsidizing some of the lower costs in these countries.

 

And while there are certainly differences across the country, I think there are more similarities. Just like I don't think it made any sense for all 50 states to spend the time and $$$$$$ developing 50 sets of standards and state tests, some things such as the earned income tax credit are most efficiently done at the federal level. I honestly think it would be frightening to see how far down some states would go if left completely to their own devices. And some people, including members of our military, have almost no control over where they live.

For military, then, make some sort of Federal group to oversee them as they move from Federal land to Federal land or are in retirement. And, still have checks and balnces in place for some Federal oversight.

 

For example, the Federal Aviation Assoc. oversees all airlines in the U.S.. It would not be too tough to make a group that made sure states were not violating civil, legal and/or human rights.

 

Regarding large scale purchasing power - you would still have that. What the Feds did, now the states would do. And there would be competition which could decrease prices. "Heh, medical supply company, you sold supplies to VA for $100, if you don't give me $100 too I will go to your competitor."

[Pam in CT]

re public policy rationale for government favoring homeowners over renters:

I think this goes back to the theory that if you own your own, you have more power vs. if someone else owns and can kick you out or make it so hard that you move out.  There is also a theory that if you own your home, you will be more responsible to your neighborhood / community since you have a long-term commitment to it.  I'm sure there are other reasons too why we have a policy to encourage home ownership.

 

I have never been impressed with the hodgepodge approach to tax incentives for higher education.  We need to go back to the drawing board on that for sure.

 

 

Yes; and I have also seen the argument that homeowners are more likely to invest in durable appliances and in their yards and gardens.

 

 

All of which has some logic (though one could generate an equally compelling, other logic, about the public policy benefits of investing in folks closer to the edge, to free up limited income for things like healthcare or education)... IF the data supported the aspiration of moving people on the cusp of financial stability off of rental and into owned housing through the MID.  But the data doesn't support that -- in both utilization rates and even more starkly in actual absolute dollar terms, it overwhelmingly is used by the top two quintiles of both income and wealth.  

 

(Which makes total sense given how relatively few lower-income households even itemize, as well as the arithmetic fact that higher mortgages have higher absolute dollar payments to deduct.)

 

I agree with our current hodgepodge system exerting distortion effects, as well as complexity costs.  I'd like to see a VAT constitute the bulk of federal revenues.  Not in my lifetime but a girl can dream, lol.

[Pam in CT]

re "negative gearing"

Negative gearing is widely accepted to have distorted the market in favor of investors.

 

Investors (and savvy financial planners) are always looking for benefits and breaks come tax time, and negative gearing allows them to take advantage of a short-term loss. Negative gearing isn’t allowed in many other developed markets around the world, with many economists claiming that it inflates house prices.

Statistics from the ATO show that the value of negative gearing tax breaks claimed for investment properties decreased from $13.8 billion to $12 billion between the 2011-12 and 2012-13 financial years. This trend is a reflection of attitudes towards negative gearing which suggest that negative gearing can have a detrimental affect on the Australian property market and the economy as a whole.

A 2015 report from the Australian Council of Social Service (ACOSS) claimed that more than half of the benefit of negative gearing deductions goes to people who earn more than $100,000 a year. These high-income earners represent the top 10% of personal taxpayers, and the report pointed to the fact that negative gearing helps the rich get richer and puts a strain on public revenue. In addition, over 90% of borrowing done by investors is for existing rental properties rather than new ones, leading to rising prices on existing houses and little being done to supply new houses.

https://www.finder.com.au/what-is-negative-gearing#what

 

Median house price in my city is 1.5 million, for reference. 

 

 

I had to look that term up.

 

Holy cannoli.  Yes, I can certainly see how that would exert a strong upward distortionary pressure on housing costs.  Higher than that of our MID even, I daresay.

 

I expect we can expect that coming to towns near us, soon.   :huh:

[MommyLiberty5013]

On a personal note, I am turning in now and will be out for a few days. Not ignoring anybody.

 

Sincerely, thank you for this discussion. Maybe you do not feel the same way, but despite opposite viewpoints, I do not hold any ill feelings and like that there has been a decent back and forth here between posters, which has not turned inflammatory. Everybody gets a cookie!!!   :hurray: 

 

- ML

 

[SKL]

While there may be lots of valid reasons to promote home ownership, research has not shown the mortgage interest deduction to be a significant factor in rates of home ownership.

 

I haven't researched that.  Do you have a link to the research?  I know many people have done the math and made the decision based on after-tax rent vs. mortgage differential - including me 22 years ago when I took the plunge.  It wasn't the only reason I did it, but the cost saving was significant as I was paying out most of my income on student loans at that time.

 

[Reefgazer]

I think it is uniquely American to have to take great risks to succeed; I think this is why so many first world countries are flabbergasted at what is required to succeed in this country because they don't have the same DNA in their constitutions.  In fact, risk-taking is how our country was conceived, and the constitution was written with the assumption of that risk.  But I do not think that relies on luck, because short of winning the lottery, I don't think luck really exists.  Instead, I think we make our chances, that look very much like sheer luck, by setting ourselves up to succeed, taking the long view, and grabbing opportunities (even the ones in disguise) at every chance.

Please forgive the minor rabbit trail, but this touches on something I've been thinking about.  Why is risk-taking seen as so critical to success these days?  It seems so un-American to rely on taking risks to get ahead.  Fundamentally, taking a risk means relying on luck, and the United States still has at our core the Puritan ideas of hard work, delayed gratification, and investment (perhaps in oneself) as key to success.  Randomness as a key factor to success seems foreign and wrong to me.  Obviously, there are no sure things, but it strikes me that the most American approach to that is to reduce risk by hard work, education, research, etc., not just by rolling the dice and taking a risk.

 

I feel like we've completely lost the meaning of the work "risk".  We use it colloquially as Moxie did above when talking about starting a business, but how much the the daughter really risk?  Was she ever in danger of becoming homeless and not knowing where her next meal might come from if her business failed?  I doubt it.

 

[Rosie_0801]

Where I live, well over 90% of residents are homeowners.  And I do not live in a rich area at all.  It is also pretty easy to buy a house in poor neighborhoods.  I've seen them under $10,000.  So where I live, they are serious about encouraging homeownership for the majority of people, not just wealthy people.  We also have serious charities that help make homeownership feasible.  Also the inheritance rules allow for transfers of modest property to be done without tax.

 

It's possible to buy a house for $10,000 here. It either won't come with land to put under it, or it will require a 3.5 hour commute to work.

 

 

Where Sadie lives, the cheapest place on the market is a $415,000 studio apartment. The cheapest 3 bedroom seems to be 1.6 million.

[TravelingChris]

I was listening to NPR yesterday and there was a discussion about the richest companies which are Apple, Google, Amazon, Microsoft and Facebook.  All the people who started those companies are very wealthy.  WHat little I know about them, none of them came from very wealthy families.  At least the few that I have heard about came from normal working families= not necessarily blue collar but not Hamptons either.  WHat is happening is that we are developing into a meritocracy. But I also see that some of them give a ton of money away.  

 

As to spending more on education, all I know is that money spent on public school education has little to do with success.  Many of the worse school districts are spending much more than the better districts.  

 

Many states already have programs for basically free higher education.  You do have to meet criteria though.  I don't think that it is the best thing to be trying to push all students to college.  Not all will do well there and others would do much better if they had vocational training.  

[creekland]

Interestingly enough, compare the US debt to EU countries... you know, those with health care provided with tax dollars (for almost all of them).  We won't even go into the rest of the safety net or education opportunities elsewhere.

 

https://www.statista.com/statistics/269684/national-debt-in-eu-countries-in-relation-to-gross-domestic-product-gdp/

 

Admittedly 4 are higher than the US (Greece, Italy, Portugal, and Cyprus), but then there are the rest...

 

But "we" can't do it.  That only works for "those other folks."  Hillbilly Elegy indeed.

[ChocolateReignRemix]

For military, then, make some sort of Federal group to oversee them as they move from Federal land to Federal land or are in retirement. And, still have checks and balnces in place for some Federal oversight.

 

For example, the Federal Aviation Assoc. oversees all airlines in the U.S.. It would not be too tough to make a group that made sure states were not violating civil, legal and/or human rights.

 

Regarding large scale purchasing power - you would still have that. What the Feds did, now the states would do. And there would be competition which could decrease prices. "Heh, medical supply company, you sold supplies to VA for $100, if you don't give me $100 too I will go to your competitor."

 

You have a very limited understanding of markets and buying power.

 

Regarding your faulty pie analogy, the issue is that currently many are taking more of the pie than they should relative to the ingredients they have put into its production.  How that happens varies, but for starters it is faulty to believe the Walton family members have reached their level of wealth simply due to hard work.  Market manipulations, tax breaks, and using our (limited) social safety net to subsidize their employees has had a dramatic impact on their success.

 

The wealth creation in the United States now is very different than what we experienced prior to the 1980s.  It is now based more on paper wealth, and there is strong evidence that the tax breaks for capital gains have led to to the bubbles and busts that we are starting to see more frequently in our markets.  When income tax rates and capital gains rates were higher, there was less financial speculation and more investment in real assets as a way to build long term wealth.  Which is why we experienced more sustained growth during that time period than we are seeing now.  If we hit another period of significantly decreasing regulations, particularly in the financial markets, you should expect another market crash.  One of these days we may just walk ourselves into another that will make 2008/2009 look like a hiccup.

[Frances]

Because I did make it without government help; my student loan was private and was paid back with interest, we have no HSAs, no college savings account because we didn't want the restrictions on them, and my DH's government healthcare is part of his compensation package for the work he does). The mortgage interest deduction is not government welfare; it is simply returning my money to me that the government has confiscated. In addition, that mortgage deduction, which helps all people buy homes, promotes employment in appliance purchases, Home Depot-like stores, and lawn care services. Clearly, even Congress is able to see that it is a deduction that pays back in created jobs because it is one of the few deductions preserved in the 1986 tax reform bill. The IRA is my own money, including the part that is confiscated for taxes that the government so graciously gives me a "break" on. We all pay taxes to fund Medicaid, but it is still straight-out welfare and not comparable to the other items on your list. This is because the taxes taken will never be used by the wealthy who pay them and instead given to others, who will reap far more than they paid in (if they even paid in anything). I do agree with you that all social security benefits should be taxed.

 

According to the IRS and Pew Research, the majority of taxes are paid by the wealthy, and in 2014, 35% of citizens paid nothing in income taxes. I'm having trouble linking, but these are the second and third sources that come up on a Google search, plain as day. This country uses the wealthy as its cash cow, and without the income taxes paid by them, there would be zero safety net. People who clamor to confiscate "more" from the wealthy certainly know this, as well. I do think we need to strengthen our social safety net and states need to solve the health care issue. But everyone needs to contribute something and have some financial skin in the safety net game. Right now, there are too many people who think that they are entitled to other people's money without considering what they can do to relieve the pressure on the system.

I don't think the mortgage interest deduction is being kept because it creates jobs. My state has considered getting rid of it and that argument has never been used. It primarily is kept due to very strong lobbying efforts by those who benefit from it such as realtor and homebuilder associations and banks. And those that get good health insurance as part of the compensation package for their job are not being taxed on that compensation, unlike someone who gets no health insurance but wages instead. I certainly view that as a benefit, just as I view the $48k we put in our 401k each year being exempt from taxes as a major governmental benefit that most people don't make enough to take full advantage of.

 

If you are only focusing on federal income taxes, then it is true that a fairly large percentage do not pay in any given year. But that is balanced out by all of the other taxes they do pay (payroll, sales, state, property through either rent or own, etc), the very regressive nature of most state tax systems, and that most move in and out of not paying. Lots of young college age students and elderly or disabled living on fixed incomes don't pay, but the majority of people do pay for much of their life. I supposed we could make everyone pay some token amount of federal income taxes every year, but that is really not going to generate much in the way of $ since it is likely that many of those would then need more government aid to meet basic necessities.

 

Personally, I'm fine with paying more, even significantly more, so that others may have the basic necessities of life, including some type of universal healthcare and high quality education for all. But given that we currently only have a tattered social safety net, I do wish people would not choose to use it to support lifestyle choices or in rare cases profit from it rather than for true unexpected needs, as I think those behaviors make it less likely we will ever have a strong safety net.

[ChocolateReignRemix]

I don't think the mortgage interest deduction is being kept because it creates jobs. My state has considered getting rid of it and that argument has never been used. It primarily is kept due to very strong lobbying efforts by those who benefit from it such as realtor and homebuilder associations and banks. And those that get good health insurance as part of the compensation package for their job are not being taxed on that compensation, unlike someone who gets no health insurance but wages instead. I certainly view that as a benefit, just as I view the $48k we put in our 401k each year being exempt from taxes as a major governmental benefit that most people don't make enough to take full advantage of.

 

If you are only focusing on federal income taxes, then it is true that a fairly large percentage do not pay in any given year. But that is balanced out by all of the other taxes they do pay (payroll, sales, state, property through either rent or own, etc), the very regressive nature of most state tax systems, and that most move in and out of not paying. Lots of young college age students and elderly or disabled living on fixed incomes don't pay, but the majority of people do pay for much of their life. I supposed we could make everyone pay some token amount of federal income taxes every year, but that is really not going to generate much in the way of $ since it is likely that many of those would then need more government aid to meet basic necessities.

 

Personally, I'm fine with paying more, even significantly more, so that others may have the basic necessities of life, including some type of universal healthcare and high quality education for all. But given that we currently only have a tattered social safety net, I do wish people would not choose to use it to support lifestyle choices or in rare cases profit from it rather than for true unexpected needs, as I think those behaviors make it less likely we will ever have a strong safety net.

 

I think we may have buried ourselves into a spot where removing the mortgage deduction would gut housing prices, and could possibly send us into another housing collapse.  If there was a way to mitigate the impact it would have I would be all in favor of removing that deduction.

 

Interesting point about the 401K plans.  Another example of creating a benefit to employers partially paid for by lowering tax revenue.

 

Edited July 19, 2017 by ChocolateReignRemix

[SKL]

...

(Which makes total sense given how relatively few lower-income households even itemize, ....)

 

Few low-income households pay taxes, largely because the standard deduction and personal exemptions and income-based tax credits zero out their tax without them needing to itemize.

 

However, the individuals who do itemize are not rolling in dough.  They are still often struggling to make ends meet.

[creekland]

I think it is uniquely American to have to take great risks to succeed; I think this is why so many first world countries are flabbergasted at what is required to succeed in this country because they don't have the same DNA in their constitutions.  In fact, risk-taking is how our country was conceived, and the constitution was written with the assumption of that risk.  But I do not think that relies on luck, because short of winning the lottery, I don't think luck really exists.  Instead, I think we make our chances, that look very much like sheer luck, by setting ourselves up to succeed, taking the long view, and grabbing opportunities (even the ones in disguise) at every chance.

 

So you don't think there's anything at all to the fact that Kid A born to a family like mine is likely to do well and Kid B who is born to abusive parents who didn't even stay together and worked minimum wage jobs is not?  What about Kid C who was born in Mosul (or slums of Rio or anywhere similar)?

 

Did Kids A, B, or C choose their starting point?  There's no luck to that at all?

 

And there's no luck favoring Kid D who is 100% healthy and Kid E who finds out they have cancer at 19 years of age with neither of them being able to afford health insurance?  What about Kid F who gets Cystic Fibrosis or Kid G who is an Aspie?  There's no luck involved in any of those and the parents are just supposed to somehow have set themselves up for dealing with these - even if they have no inherited wealth?

 

Honestly, thinking there is no luck involved boggles my mind.

 

Yes, encourage folks to do what they can to succeed with this life that we are living in (that's what the whole first half of this thread was about) - encourage grit, determination, and using what's available to them including programs that are out there, but luck is what gets people to their starting point - AND - can provide connections later on.

[Pam in CT]

Oh Sadie.

 

I am so sorry.

 

 

[ChocolateReignRemix]

Few low-income households pay taxes, largely because the standard deduction and personal exemptions and income-based tax credits zero out their tax without them needing to itemize.

 

However, the individuals who do itemize are not rolling in dough.  They are still often struggling to make ends meet.

 

Correction: pay federal income taxes.  The vast majority of households pay taxes of some sort.

[Rosie_0801]

And it's cumulative. If we don't have a house, we don't have the equity to help our kids get onto the ladder. If they don't get on the ladder, how will their children? This is how wealth is entrenched and the gap widens, and widens.

 

It's scary. I am on this side of the divide, and I am educated, white, able bodied. What's it like for those in even worse situations than me? A nightmare. I can't believe people can just sit at a computer screen and call them - basically - thieves.

 

It'll be easier for your kids if they are able to move to the country cities. Having most jobs concentrated in the capital cities is such a problem.

[Corraleno]

But there is not a pie, some people see all this as a pie. If someone sees someone else having more, they think they have less and the only way to get more for themselves is to take from someone else's deemed "excess." But, many do not think the finite pie exists at all, that was my previous point.

 

Many see wealth, money, and income as infinite. And someone having more is not a threat to me, meaning that I will always have less. Someone's else's fortune \ne (is not equal) to me having nothing or little. So if I am a person who has nothing or little, I do not think the best solution lies in me taking from someone else's "excess."

 

When you say that "someone else's fortune is not equal to me having nothing or little," you ignore the fact that in many cases that fortune was built on the backs of workers who are paid so little they cannot afford decent housing or healthcare; the wealthy depend on the fact that other people are poor — and will continue to remain poor. And yet they claim that they're rich because they work so much harder (as if someone who earns $250K/yr is working 10 times harder than the poor schmuck who is working 60 hrs/wk at $8/hr just to make $25K/yr), therefore they deserve access to safe housing and higher education and good healthcare. If those lazy poor people just worked harder, then they wouldn't have to "steal" money that rightfully belongs to hardworking rich people!

 

We need a decent minimum wage, universal healthcare, and access to affordable higher education for everyone. Because the problem isn't lazy, jealous poor people trying to steal pie from the rich, the problem is a system where the rich control access to all the ingredients for making the pie to begin with, and then blame the poor for being too lazy to bake their own.

[Pam in CT]

Few low-income households pay taxes, largely because the standard deduction and personal exemptions and income-based tax credits zero out their tax without them needing to itemize.

 

However, the individuals who do itemize are not rolling in dough.  They are still often struggling to make ends meet.

 

 

Agreed.  That's among the major reasons *why* so few take the MID, and it makes perfect sense.  

 

Still, the MID doesn't benefit households that do not take the MID.  Looking either at utilization rates or (even more strongly) absolute dollar levels, it overwhelmingly benefits the top two quintiles.  And, by definition, benefits homeowners not renters.

 

I totally understand how disruptive it would be, to existing owners and particularly to developers and real estate financiers and real estate agents, to mess with such a long-standing and entrenched public policy.

 

 

My point is merely that the mortgage interest deduction is redistributive -- it unambiguously favors one segment of the population over another segment -- yet it is "hidden" in such a way that we do not think of it in the same was as we view more visible transfer payments like SNAP.

[Rosie_0801]

I really hope they can. Both girls seem to be heading into industries where regional city employment might be possible. Thank God for HECS.

 

If anyone knows of anything useful to read on decentralising employment, I'd be very interested.

[Reefgazer]

OK, I failed to preface my comment with "most" people born in the USA. I'm not talking about Mosul; let's stick to the USA. I'm not talking about the kid who has a debilitating, life threatening chronic disease, or a kid who is incapable of caring for themselves. Those people have few choices to make their own so-called "luck" and deserve unquestioned benefits. Regardless of circumstances, almost everyone makes their own luck. Tossing out Mosul examples or cystic fibrosis is derailing the point.

 

ETA: We are all born to circumstances we can't control; that's certain. However, once you become an adult and you have free agency, it's time to stop blaming everybody else for your circumstances and poor choices. If you aren't chronically, life-threatening I'll and within the range of typical, you make your own mark when you're an adult.

So you don't think there's anything at all to the fact that Kid A born to a family like mine is likely to do well and Kid B who is born to abusive parents who didn't even stay together and worked minimum wage jobs is not? What about Kid C who was born in Mosul (or slums of Rio or anywhere similar)?

 

Did Kids A, B, or C choose their starting point? There's no luck to that at all?

 

And there's no luck favoring Kid D who is 100% healthy and Kid E who finds out they have cancer at 19 years of age with neither of them being able to afford health insurance? What about Kid F who gets Cystic Fibrosis or Kid G who is an Aspie? There's no luck involved in any of those and the parents are just supposed to somehow have set themselves up for dealing with these - even if they have no inherited wealth?

 

Honestly, thinking there is no luck involved boggles my mind.

 

Yes, encourage folks to do what they can to succeed with this life that we are living in (that's what the whole first half of this thread was about) - encourage grit, determination, and using what's available to them including programs that are out there, but luck is what gets people to their starting point - AND - can provide connections later on.

Edited July 19, 2017 by reefgazer